On October 7, 2025, the European Commission submitted its "Permanent Steel Safeguard Mechanism" proposal (COM (2025) 726 final) in Brussels to replace the June 2026-expiring temporary steel import safeguards. The adjustment strengthens trade control via quota/tariff hikes and blocks circumvention with the "Melt and Pour" traceability rule, profoundly impacting global steel trade and industrial chains.
The EU's temporary steel import safeguard measures, launched in 2018, mainly adopt a "quota + tariff" model to mitigate import shocks. In May 2024, the EU adopted the final ruling of the safeguard measure review, deciding to extend the original policy until June 30, 2026. During this period, a 25% tariff is imposed on steel imports exceeding quotas, with an annual quota growth rate of only 1%. However, the European Commission pointed out in its assessment that the global steel overcapacity problem has not been fundamentally resolved, and low-cost imports caused by non-market factors continue to impact the EU's domestic industry. Temporary measures alone are insufficient to achieve long-term industrial protection.
The "Permanent Steel Safeguard Mechanism" proposal focuses on three core objectives: first, replacing the expiring temporary measures to build a stable and predictable trade control framework; second, resisting unfair competition caused by global overcapacity to safeguard the market share and profitability of the EU steel industry; third, striking a balance between trade protection and industrial transformation, providing policy support for the EU steel industry's decarbonization goals, and ensuring strategic industrial autonomy. Valdis Dombrovskis, EU Trade Commissioner, emphasized that the proposal is a "necessary measure to protect European industrial jobs and promote the green transition."
The most notable adjustment of the new rules is the reduction of tax-free steel import quotas. The proposal clearly sets the annual tax-free quota at 18.3 million tons, a sharp 47% cut from 34.5 million tons in 2024, equivalent to directly halving the EU's tax-free steel import space. This quota covers multiple categories of steel products and steel articles under EU CN codes, including all core products previously controlled by temporary measures. The European Commission explained that the quota reduction is based on the calculation of import data and domestic production capacity over the past five years, aiming to reserve sufficient market space for EU steel enterprises while avoiding excessive restrictions on raw material supply for downstream manufacturing.
In terms of tariff settings, the new rules will double the tariff on steel imports exceeding quotas from the current 25% to 50%. This adjustment significantly raises the cost threshold for super-quota imports and will effectively curb short-term import surges. Notably, the proposal clarifies that the scope of tariff application is consistent with the quota, covering key products such as hot-rolled coils, cold-rolled sheets, billets, and steel pipes, with no phased tariff reduction arrangements, reflecting the EU's determination for long-term control.
To combat the "circular import" abuse, the proposal introduces the "Melt and Pour" traceability rule for the first time, which becomes the core innovation of the policy control. This rule clarifies that the "country of origin" of steel products shall be based on the "place of first melting and pouring," i.e., the location where steel is first produced in liquid form in a steelmaking furnace and cast into solid form (billets, ingots, or finished products), rather than the location of subsequent processing or assembly.
Importers are required to submit documents such as "steel mill certificates" to EU customs, clearly indicating the specific factory and time of melting and pouring. Otherwise, they will not be eligible for quota preferences and will be subject to a 50% high tariff. This rule directly addresses the problem of some enterprises changing the apparent country of origin through simple processing in third countries (such as rolling billets into sheets) to evade trade restrictions, especially forming a precise crackdown on steel trade that evades tariffs through transit countries.
Corresponding to the "permanent" name, the proposal sets up a multi-dimensional dynamic evaluation and exit mechanism to avoid rigid trade measures.
Every two years after the regulation takes effect, the European Commission shall conduct a comprehensive evaluation of the scope of controlled products. Based on market changes and industrial needs, it will determine whether to include downstream products containing steel in the control and, if necessary, adjust the attachment list through legislative proposals. This design reserves flexibility for the policy to adapt to industrial development and can address regulatory challenges brought about by the extension of the steel industrial chain.
The first comprehensive evaluation shall be completed by July 2031, followed by evaluations every five years thereafter. The evaluation content includes core indicators such as global steel overcapacity trends, the impact of third-country trade policies, the economic performance of the EU steel industry, and decarbonization progress. If the evaluation shows that "the global overcapacity problem has been significantly alleviated" or "the EU's domestic industry has regained stable competitiveness," the EU will initiate the process of repealing or amending the regulation to ensure that the measures only exist "when necessary."
The new rules will directly enhance the market competitiveness of EU steel enterprises. The dual control of quotas and tariffs will reduce the impact of low-cost imports, helping domestic enterprises stabilize product prices and capacity utilization. At the same time, the policy is linked to decarbonization goals, which will promote EU steel enterprises to increase environmental protection investment and accelerate the green transition, aligning with the long-term layout of the EU's Carbon Border Adjustment Mechanism (CBAM). The European Steel Association (Eurofer) expressed support for the proposal, believing that it will create a "fair competitive market environment" for the EU steel industry.
For countries highly dependent on steel exports, the new rules will bring significant trade pressure. On the one hand, the 47% quota reduction directly reduces the channel for exporting to the EU; on the other hand, the "Melt and Pour" rule significantly increases export compliance costs, requiring enterprises to establish a complete traceability system. Especially for enterprises exporting to the EU through third-country transit, traditional circumvention paths are blocked, and they need to readjust their export strategies or increase production capacity layout in the EU.
EU downstream manufacturing industries (such as automobiles, machinery, and construction) may face pressure from rising raw material supply costs. Some small and medium-sized enterprises relying on imported steel may face raw material shortages or sharp cost increases due to quota restrictions or high tariffs. In response, the European Commission stated that it will closely monitor the dynamics of downstream industries and minimize the negative impact on manufacturing through optimized quota allocation and compliance guidance. However, relevant enterprises still need to cope with supply chain adjustment costs in the short term.
The EU's "Permanent Steel Safeguard Mechanism" proposal still needs to be reviewed and approved by the European Parliament and the Council, and is expected to formally take effect in the first half of 2026, achieving a seamless connection with existing measures. From a trend perspective, this policy is not only an upgrade of EU steel industry protection but also reflects the new trend of "industrial security first" in global trade.
For steel exporting countries, it is necessary to accelerate capacity optimization and industrial upgrading, enhance product competitiveness through technological innovation and green transformation, and strengthen trade negotiations with the EU to secure more reasonable market access conditions. For the EU internal, balancing the protection of steel enterprises with the development of downstream manufacturing, and trade control with the stability of global supply chains will become core challenges after the policy is implemented.
The implementation of this mechanism will reshape the rule system of global steel trade, promote the industrial chain and supply chain to develop in a more transparent and compliant direction, and may also trigger a new round of trade policy adjustments. The global steel industry is facing dual tests of trade game and industrial transformation.
